US Stock Futures Decline After French, Greek Elections

The board shows a drop in the Dow Jones Industrial Average at the New York Stock Exchange at the close of trading. Photo: Reuters

Futures on major US stock indices point to a lower opening Monday after key elections in Europe showed that voters rejected pro-austerity governments.

Futures on the S&P 500 are down 0.51 percent, futures on the Dow Jones Industrial Average are down 0.49 percent and Nasdaq 100 futures are down 0.53 percent.

European and Asian stock markets slumped Monday as the Eurozone debt crisis once again took the center stage after key elections in Europe affirmed political backlash against fiscal austerity.

European stocks are currently trading lower with DAX30 down by 57.27 points and CAC 40 down by 8.19 points.

Socialist Francois Hollande, who has vowed to push for less austerity, defeated Nicolas Sarkozy to become France's next president. Hollande won the election with 52 percent vote, making him the first socialist to lead the country in 17 years.

Meanwhile, Greece's pro-bailout ruling parties suffered big losses at the weekend polls sending a message that voters no longer have the stomach for tough austerity measures. Greeks voted against the New Democracy and the Socialist PASOK, which are backing austerity measures and the bailout package.

The issue is that in Greece the outcome raises the level of uncertainty a lot, because it's not clear who can form the government or in fact how long they will last, and what their attitude to the current agreements that the Greek government had reached would be, Richard Yetsenga, Head of Global Markets at ANZ Research, told Reuters.

The French and Greece results raised doubts about those countries' commitment to the austerity measures to sort out the Eurozone debt crisis.

With growing influence of anti-austerity political blocs, tensions among the Eurozone will likely be intensified and a wave of renegotiations for bail-out programmes may be sparked, said a note from Credit Agricole.

On Friday, the US stocks plunged after a slowdown in job creation heightened fears that the strength of economic recovery in the world's largest economy is losing steam. The US Labor Department said that only 115,000 jobs were added in April compared to analysts' estimation of 170,000 job gains.